Importation of White Pharma Oil Subject to Excise Tax

May 5, 1993 BIR RULING NO. 194-93 IMPORTATION OF WHITE PHARMA OIL SUBJECT TO EXCISE TAX 101 (a) 145 (a) (3) 000-00 194-93 Atty. Rolando P. Nonato Cebu Business and Investments Consultancy Ground Floor, Martinez Building Escario corner Molave Streets Cebu City This refers to your letter dated January 11, 1993, requesting for a ruling as to whether the importation of "pharmaceutical oil", otherwise known as white pharma oil, liquid paraffin, white mineral oil, pharmaceutic acid and cathartic, is subject to any specific or excise tax. cd It is represented that "white pharma oil" is a series of highest quality white mineral oils which are specially processed and packaged to ensure full compliance with the purity standards of the U.S. Pharmacopoeia (USP) and National Formulary (NF); that said pharmaceutical oils are pure, clear, water-white oils in five viscosity grades ranging from 15 to 100 centistokes at 40 degrees centigrades; and that it is typically applied to pharmaceuticals for use in the manufacture of pharmaceutical and cosmetic preparations, such as ointments, complexion creams, hair care products, laxatives, baby oils and as carriers in the preparation of many curative drugs. You contended that the importation of white pharma oil is not subject to specific tax since it is not petroleum product; and that since Chapter V, Section 145 is entitled Excise Tax on Petroleum Products, the implication is that the products covered therein are for petroleum related uses or purposes. In reply, please be informed that your contention has no legal basis. Section 145 of the Tax Code imposes specific tax not only on petroleum products but also upon petrolatum. Petrolatum is a semi-solid or liquid mixture of hydrocarbons derived by distillation of paraffin base petroleum fractions ( Hawley's Condensed Chemical Dictionary ). The liquid form (white mineral oil) is used as laxative, textile lubricant and dispersing agent. White pharma oil falls under the definition of petrolatum as a white liquid-mineral oil used for baby oil and hair care products. Accordingly, the importation of white pharma oil is subject to excise tax of P3.50 per kilogram pursuant to Section 145(a) (3) of the Tax Code, as amended, and to the 10% value-added tax under Section 101(a) of the same Code. cdtech VICTOR A. DEOFERIO, JR. Deputy Commissioner of Internal Revenue